In (re)search of corporate governance models between markets and hierarchies : The governance of franchising

Abstract: The research project started with the purpose of understanding the importance of corporate governance in franchising. The dissertation includes four articles all of which describe the governance of franchising.The first article is a review study using a strategy of systematic search to produce a systematic review. The second article, building on the first, expands the conceptual domain within the governance of franchising. The third is an empirical contribution by an exploratory study with theory development. Finally, the fourth article evaluates governance of the findings in articles 1-3 in an empirical model. The first article explores whether corporate governance could be a factor explaining the success or failure of franchising networks. The article presents for the first time a review of articles at the interface of corporate governance and franchising. This division enables a detailed analysis of current research in the field. The contribution of article 1 is that the literature largely ignores the traditional view of corporate governance when examining, the structure and performance of franchising networks. Additionally, article 1 finds that franchising literature covers governance topics when discussing the governance modes and provides grounds for developing corporate governance theories. The second article aims at expanding the conceptual domain within governance of franchising. Article 2 explores at which levels a franchise company is viewed and suggests a conceptual model that expands the concept of governance in franchising to include higher-order ownership structures. The article provides guidance for future work that expands corporate governance and franchising scholarship by highlighting some research questions of significant interest related to an emerging view of governance in franchising. Furthermore, it clarifies the differing perspectives on corporate governance and franchising. The contribution of the second article offers a wider corporate governance view, together with the franchisees that invest their own capital and maintain their own balance sheets, providing a rich context to explore governance issues. The theoretical insight has contributed to a new expanded franchise corporate governance framework model for analyzing the area of governance in franchising.The third article explores the absence of understanding of the role and influence of the individual members in the governance processes of these franchise companies. Furthermore, this qualitative study of how the ownership and governance of the firm affect the franchise system shows the limited knowledge we have within the area of governance in franchise companies. The findings revealed to suggest that governance and ownership transform how franchise businesses are directed, by applying contracts as a buffer between the governance layers but also with are lational governance view not only from the franchisor but also at the board of director’s level. The contribution of this empirical data suggestsinteresting results that franchise depends on ownership. In conclusion, this paper shows that the choice of franchise can depend on the ownership situation. While franchise research has historically mainly focused on the channel governance of the relationship between the franchisee and the franchisor and from a theoretical perspective, the summary of the interviews and data in the third article points us to a new typology for the governance situation. The fourth article considered world sales, productivity, and franchise levels as dependent variables. If the company has survived at the top, it provides an indirect basis for an effective franchising model. In this study, I examined the effects of corporate governance by studying ownership changes impacton firm franchise performance. It is commonly assumed that superior corporate governance provides strategic and operational benefits and should result in superior financial performance. The fourth article focused on the 139 largest US-based international firms in the franchise retail sector over 10 years, conducting a panel fixed effect regression-based analysis. The article emphasizes on understanding how ownership characteristics have led to financially significant effects on the level of franchising. The findings provided evidence that changes in ownership governance in franchising firms create higher levels of franchising. If there is a change in ownership structure the franchise performance in terms of world sales is significantly increased and indicating that ownership structure change affects franchising performance and thus supports the research question. The fourth article fills the gaps by examining the role of ownership governance and how that affects franchise companies. Additionally, this article’s research opens up for future examination of the endurance of the stable plural-form theory.